Peso drops anew against dollar

THE PESO plunged against the dollar on Thursday as the US currency strengthened on the back of the hawkish stance from the US Federal Reserve (Fed).

The local currency finished at P51.58 against the greenback yesterday, 28.5 centavos weaker from its P51.295 close on Wednesday.

The peso traded weaker the whole day, opening the session at P51.30 versus the dollar, which was also its best showing yesterday. Its intraday low, meanwhile, was seen at P51.58 to the greenback.

Dollars traded declined to $ 878.15 million yesterday from the $943.05 million that changed hands in the previous session.

“The peso weakened today after hawkish signals from the latest Federal meeting despite keeping its policy rates steady [prompted the dollar to climb],” a trader said in an e- mail on Thursday.

As expected, the Federal Open Market Committee (FOMC) left its interest rates unchanged, with the benchmark rate still at 1.25-1.5%.

The January meeting was also the last of Janet L. Yellen as she will step down from the Fed chairmanship and will be replaced by Jerome H. Powell, who will be sworn in on Monday.

It is expected that the Fed will hike again by a quarter of a percentage point in March, the first FOMC meeting with Mr. Powell as the new chair.

Meanwhile, the American central bank said: “Inflation on a 12- month basis is expected to move up” and will stabilize around its medium-term target of 2%, Reuters reported.

The Fed added the US economy will grow at a moderate pace, citing solid gains in employment, household spending and capital investment.

“It seems they ( The Fed) are poised to hike [ their rates] this March so it was a bullish Fed meeting for the market,” another trader said, adding that this caused the dollar to strengthen against the peso and other currencies such as yen and euro.

Meanwhile, the first trader added that the “stronger- thanexpected US private employment data” also prompted the greenback to strengthen.

According to ADP and Moody’s Analytics, private firms hired 234,000 employees in January, bigger than the estimate of economists surveyed by Reuters of 185,000 jobs.

For today, the second trader said the peso will move from P51.50 to P51.70, while the first trader gave a wider range of P51.40 to P51.80.